Are you aware of the old random stock pick fax scam?
You get some huge list of fax numbers. You pick some random penny stocks and fax each one a different random pick, telling them it's going to explode. Then you look and see which picks fail and you discard those numbers.
Eventually you get down to a small list of numbers they you've been consistently making amazingly prescient stock picks to for the last weeks/months... then you tell them all to invest in some dogcrap that you've cornered or ask them to buy your latest picks, or some other story to extract a lot of money from them.
The victims rubs your rabbit's foot and you cash in.
Thing is that the same scam can be performed in a decentralized manner, even by accident, just by having a lot of investment advisors some of whom get a consistently lucky run.
Say you have a room full of millions of people playing roulette. You have no knowledge of how they place bets but you know how roulette works. There's a wheel, 38 slots etc.
You watch all the players for a while and see that 1 player has won every single bet they've made 10 times in a row.
How much money would you be willing to give that person to bet for you?
Now imagine that you talk to this player and they reveal to you that actually they work for the company that made the roulette wheels and that they can control where the ball lands 99% of the time with the computer hidden in his shoe. They even show you the computer and do some example bets to prove it.
You get some huge list of fax numbers. You pick some random penny stocks and fax each one a different random pick, telling them it's going to explode. Then you look and see which picks fail and you discard those numbers.
Eventually you get down to a small list of numbers they you've been consistently making amazingly prescient stock picks to for the last weeks/months... then you tell them all to invest in some dogcrap that you've cornered or ask them to buy your latest picks, or some other story to extract a lot of money from them.
The victims rubs your rabbit's foot and you cash in.
Thing is that the same scam can be performed in a decentralized manner, even by accident, just by having a lot of investment advisors some of whom get a consistently lucky run.